Faber: Stocks Can Fall 20 Percent if New High Hit

U.S. stocks may drop 20 percent if they top their January highs, says investment guru Mark Faber.

The Standard & Poor’s 500 Index reached a high of 1,150 Jan. 19.

“I’m not sure we will make a new high,” Faber, editor of "The Gloom, Boom & Doom Report," told Bloomberg.

“But if we do, I don’t think it will be that far – maybe 1,200 – and then I wouldn’t rule out a correction of at least 20 percent.”

On the currency front, Faber says the euro is very oversold, trading at about $1.35.

“The news has been horrible for the euro zone,” he said. “I think the euro can rebound to $1.40 before it goes lower.”

Fundamentals are weak for both the dollar and the euro, Faber maintains. “What you have in Europe is indirect monetization of the debt.”

As for the greenback, “When investors realize fiscal deficits aren’t going to come down, that one state after another is going bust and that monetization is inevitable, at that point the dollar will be weak,” Faber said.

But it won’t slip against the euro, he says. “Both currencies are sick.” Gold and Asian currencies will benefit as a result, Faber says.

U.S. stocks may drop 20 percent if they top their January highs, says investment guru Mark Faber.
The Standard Poor s 500 Index reached a high of 1,150 Jan. 19.
I m not sure we will make a new high, Faber, editor of The Gloom, Boom Doom Report, told Bloomberg.
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